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Practices 11A. Funding Easement Stewardship and 12A. Funding Land Stewardship.

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December 2012: Practices 11A. Funding Easement Stewardship and 12A. Funding Land Stewardship

"Expectations for Improvement" (EFI) may be issued by the Land Trust Accreditation Commission to an accredited land trust as part of the accreditation award letter or through the compliance confirmation process. Expectations are used to foster continuous learning and quality improvement when the Commission determines that an organization needs to do additional work to fully comply with one or more elements of an indicator practice. This month we will consider practices 11A. Funding Easement Stewardship and 12A. Funding Land Stewardship.

Why is it important?

Funding of both easement and fee land stewardship is an important topic that all land trusts must consider when taking on new projects. Because these two practices are so closely related we are presenting them in a single document.

11A. Funding Easement Stewardship

Practice 11A ensures a land trust determines the long-term stewardship and enforcement expenses of each easement transaction and secures the dedicated or operating funds to cover current and future expenses. If funds are not secured at or before the completion of the transaction, the land trust has a plan to secure these funds and has a policy committing the funds to this purpose.

Before a land trust decides to accept an easement, it must consider the financial and management implications of stewardship. Monitoring an easement requires the commitment of time and money. Enforcement, should a violation arise, requires even greater resources. 

A land trust must plan to fund four major stewardship activities: baseline documentation; routine monitoring; maintaining ongoing landowner relationships; and enforcement to correct violations. Whether these stewardship activities will require lots of time and money or less depends on the complexity of easement provisions, land type, monitoring plan, availability of voluntary and donated resources, and likelihood of violations.

12A. Funding Land Stewardship

Practice 12A ensures a land trust determines the immediate and long-term financial and management implications of each land transaction and secures the dedicated and/or operating funds needed to manage the property, including funds for liability insurance, maintenance, improvements, monitoring, enforcement and other costs. If funds are not secured at or before the completion of the transaction, the land trust has a plan to secure these funds and has a policy committing the funds to this purpose.

Property that the land trust holds for conservation purposes is a permanent financial liability. It costs the land trust money up front to initiate management, and it takes money every year to monitor, maintain and manage it. Even a land trust that depends heavily on volunteers to manage its property has costs for signs, insurance, any required taxes, etc. Inflation means that it takes more money every year to get the work done.

The amount of money required to manage a property varies depending on its size, intensity of management, public use, and other factors. Each land trust must make a commitment to determine what management is needed and to fund the necessary management as long as it holds the property.

What is a commonly issued EFI related to this practice?

Two equally common EFI’s for practices 11A and 12A are the following:

11A. Funding Easement Stewardship
Expectation that X will implement its fundraising plan in order to achieve its goals for increasing its easement stewardship and defense fund so that it will have levels that are in keeping with the Commission’s Requirements Manual before it applies for renewal of accreditation..

AND

12A. Funding Land Stewardship
Expectation that X will implement its fundraising plan in order to achieve its goals for increasing its easement stewardship and defense fund so that it will have and maintain levels that are in keeping with the Commission’s Requirements Manual before it applies for renewal of accreditation and that it will build its dedicated fund to cover emergency land management needs, issues related to title, and/or legal defense or enforcement costs.

What can a land trust do to avoid an EFI?

At first-time application a land trust must provide documentation of the following:

  1. A land trust that holds conservation easements must meet the funding requirements for conservation easement defense (see below) and demonstrate one of the following: 1) it meets the stewardship funding requirements, or 2) it covers its current stewardship costs through existing sources (such as stewardship funds, operating funds, grants operating reserves, etc.) and has a credible stewardship funding plan, as described on page 56 of the Requirements Manual.
  2. For each easement transaction the land trust must also document that it uses a standard method for calculating the stewardship and defense funding needs and the amount calculated as well as evidence that a contribution was received or that there is a plan in place to secure funding.
  3. While the Land Trust Alliance has no set minimum funding levels for fee land transactions, the Commission expects that a land trust which owns fee lands can demonstrate one of the following:
    1. It has sufficient resources to cover its annual fee land stewardship operating expenses through income from dedicated funds, or
    2. It has a) dedicated funds to cover at least emergency fee land management needs, issues related to title disputes, and legal defense or enforcement costs and b) covers its current annual fee land stewardship operating expenses through diverse and secure sources of annual income (such as lease income, earned income, reserve fund income, a history of success with annual appeals for stewardship, etc.), or
    3. A credible funding plan (see page 74 of the Requirements Manual) that shows that the organization will obtain the necessary dedicated funds as well as the diverse and secure sources of income it will rely on during its accredited term.
  4. For each land transaction, the organization must also document that it has a standard method for calculating how much it needs to cover its immediate and long-term stewardship expenses for each new property (such as funds needed for liability insurance, maintenance, improvements, periodic inspections, enforcement and other costs) and the amount calculated as well as evidence that a contribution was received or that a specific plan is in place to secure funding.The Commission relies on funding recommendations from the Land Trust Alliance. These easement stewardship and defense funding levels are summarized in the table below. Please note that participation in the Terrafirma Risk Retention Group LLC, the conservation defense insurance company, is not considered by the Commission or Land Trust Alliance as a substitute for any portion of the minimum defense reserves.

At first-time application

Number of Conservation Easements

Defense Funding

Stewardship Funding

Organizations with 1-15 conservation easements

Either:
a)    $50,000, or
b)    $3,000 per conservation easement and a plan and commitment to reach $50,000 by the time of renewal

Either:
a)    A minimum of $3,500 per conservation easement, or
b)    Ability to cover current expenses with operating revenues and a plan and commitment to reach $3,500 per conservation easement by the time of renewal

Organizations with 16+ conservation easements

$50,000 for first 15 conservation easements, plus a minimum of $1,500 for each additional conservation easement


Copies of all the above documentation should be retained according to the organization’s recordkeeping policy. For details on these and other requirements review Land Trust Standards and Practices, practice 11A and practice 12A in particular, and the Commission’s Requirements Manual.

How can a land trust document that it addressed an EFI?

Land trusts applying for renewal must provide a written statement of how the organization addressed any expectations for improvement along with documentation of implementation for each. In the case of this particular practice, a land trust should also be prepared to provide the following evidence.

  1. A land trust that holds conservation easements must meet the funding requirements for conservation easement defense and stewardship, as described in the table below.
  2.  If a new easement project was completed during the accredited term, the land trust must provide documentation that it determined and secured the funds necessary to steward and defend the easement. If the applicant did not determine and/or secure these funds for the project, it must provide an explanation of how the organization will cover the current and future expenses associated with the easement. 

  3. A land trust that owns fee lands must demonstrate one of the following: 1) It has sufficient resources to cover its annual fee land stewardship operating expenses through income from dedicated funds or 2) it covers its current annual fee land stewardship operating expenses through diverse and secure sources of annual income (such as lease income, earned income, reserve fund income, a history of success with annual appeals for stewardship, etc.) and has dedicated funds to cover at least emergency fee land management needs, issues related to title disputes and legal defense or enforcement costs.

    At renewal application and thereafter

    Number of Conservation Easements

    Defense Funding

    Stewardship Funding

    Organizations with 1-15 conservation easements

    $50,000

    A minimum of $3,500 per conservation easement*

    Organizations with 16+ conservation easements

    $50,000 for first 15 conservation easements, plus a minimum of $1,500 for each additional conservation easement


    * If an applicant for renewal is unable to show that it meets the stewardship funding requirements but has made significant progress towards them, then the Commission may consider an exception to these funding requirements. In evaluating such an exception, the Commission will assess what steps were taken to meet the requirements, an explanation of the inability to meet the requirements, and documentation of how the organization plans to meet the requirements.

  4. If a new fee land project was completed during the accredited term, the land trust must provide documentation that it determined and secured the funds necessary for the immediate and long-term management and stewardship of the property as well as any management implications of the transaction. If the applicant did not determine and/or secure these funds for the project, it must provide an explanation of how the organization will cover the current and future expenses associated with the property.

If an accredited land trust expects that it will have difficulty in providing documentation for this or any issued expectation for improvement, please contact the Commission to discuss ways to document the practice.